Inflation unlikely to raise further: BofA
Almost three quarters of respondents believe inflation is only transitory, according to a Bank of America (BofA) survey, with the percentage of respondents expecting higher inflation down 19% from May.
According to the latest Bank of America Global Fund Manager survey, which surveyed 224 fund managers with $667 billion in assets under management, a net 64% of investors were expecting higher inflation in the next 12 months, down 19% from the previous month.
Some 72% said they believed inflation was only transitory compared to 23% who thought it would be permanent.
“Investors [are] bullishly positioned for permanent growth, transitory inflation and a peaceful Fed taper via longs in commodities, cyclicals and financials,” the report said.
However, the threat of rising inflation remained the number one tail risk for respondents, joint with the threat of a taper tantrum. Over half of respondents expected the US Federal Reserve to taper its asset purchases in August/September.
Regarding positioning, BofA said investors were “significantly overweight” cyclical stocks such as the Eurozone, banks, energy and materials and were underweight defensives. There was a 39% underweight by respondents to utilities, the largest since February 2017. Technology weightings had doubled from 11% to 22% over the month.
Investors said they expected value stocks would be the asset most likely to outperform over the next 12 months followed by technology stocks.
Cash was down from 4.1% in May to 3.9% in June which BofA said was an indicator to sell global equities.
AUTHOR
Laura Dew
Recommended for you
Perpetual has released its Q2 fund flows showing a fall back into outflows after a positive Q1, as well as an update on its planned deal with KKR.
Magellan has announced a raft of executive changes including the departure of head of investments Gerald Stack after 18 years and a second appointment from Maple-Brown Abbott.
Morningstar research of seven active Australian asset managers has found they are expected to see client redemptions averaging 3.1 per cent of their FUM per annum through to FY29, with two forecast to lose more than 10 per cent.
Franklin Templeton is to get rid of its Martin Currie branding and fold them into the wider group under ClearBridge Investments and Franklin Equity Group.
